LONDON—British regulators are pressuring Bank of America Corp.’s European investment-banking arm to improve the way it manages risks, saying its current practices are “simplistic” and need to be retooled, according to people familiar with the matter and communications reviewed by The Wall Street Journal.

The criticism, from the U.K.’s Prudential Regulation Authority, was included in a letter this year to the Bank of America unit. The letter, written by the PRA’s head of supervision for U.S. investment banks, also said the...